[Photo by Kim Ho-young]
Korean composite stock indices Kospi and Kosdaq have hit new annual lows Monday on continued foreign flight from the market as the external-reliant economy is expected to take a direct hit from a global recession.
Kospi last week lost 5.97 percent and Kosdaq 8.18 percent. Kospi fell 2.04 percent to close at 2,391.03 and Kosdaq 3.62 percent to 769.74 on Monday. As much as 1,921 trillion won ($1.5 trillion) has been wiped out from Kospi last week and 354 trillion won from Kosdaq.
Kospi has retreated 20 percent and Kosdaq more than 25 percent from their 2021 closing and their cap thinned by 282.2 trillion won and 92.1 trillion won, respectively.
If the trend continues, they could record their worst year since the year of financial meltdown in 2008 when Kospi lost 41 percent and Kosdaq 53 percent.
The fast rate increases and runaway inflation have been fanning fears about a global recession next year.
“The Korean market receives bigger hit from the recession scenario due to its heavy reliance on global economy, said Seo Sang-young, a researcher at Mirae Asset Securities.
“Unprecedentedly steep rise in the U.S. dollar and yen’s fall has fanned panic,“ said Jeong Moung-ji, a researcher at Samsung Securities.
Analysts however did not agree to the market in a crisis.
“Even if the market performs at its worst since 2008 crisis, it cannot be deemed at alarming state as gains have been steep over the last two years,” Jeong added.
Foreign abandonment in large-cap stocks battered the key indices.
Large-cap stocks tumbled 17.33 percent, mid-caps 14.03 percent and small caps 9.89 percent.
Biggest losers were Naver (off 37.25 percent), Kakao. (35. 82 percent), Samsung Electronics (23.63 percent), LG Energy Solution (28.73 percent), and SK hynix (26.41 percent). Samsung Electronics shares slipped below the 60,000-won level Friday for the first time since November 2020.
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]